Home reports make return of 'offers over' prices unlikely, says expert

Published on Friday 1 January 2010 20:32

HOME reports have changed the Scottish housing market in ways that are unlikely to be reversed if prices rebound to their 2007 highs, an expert has claimed.

Scott Brown, estate agency partner at Warners in Edinburgh, said home reports have fuelled a decline in "offers over" pricing, with sellers favouring the "offers around" approach instead.

More than 75,000 home reports – intended to provide clarity about property valuations and conditions – have been completed since their introduction on 1 December 2008.

Brown said they have allowed buyers to base offers on clear valuation in the reports – which also include an energy performance certificate and condition questionnaire – rather than making a "blind offer" higher than the seller's quoted price.

He added: "When the market was at its peak in 2007, many people would deliberately set a low 'offers over' price on their property and would not accept an offer unless it was at least 25 per cent higher than that price. It was a situation that created a lot of confusion among buyers and meant sellers had an automatic expectation for huge premiums on their properties. But with home reports now firmly established, I do not see this situation returning."

Part of the reason is the increasing realism in the housing market in recent months. Brown claimed the days of buyers being expected to pay premiums of 25 per cent or more to secure a home are unlikely to return. He said: "I believe home-report valuations will act as a 'common sense' marker for buyers and will make it less likely for them to get carried away when going for a new home."

Brown, whose firm has seen a 40 per cent bounce in sales over the past five months compared with the same period last year, said home reports had helped drive a recovery in sales both in Edinburgh and across Scotland.

"However, I also believe anyone who thinks further recovery in the market will mean a return to the 'old' system of big premiums for offers over prices will be very disappointed," he said.